Digital Transformation: Transforming More Than Our Social Lives

What do we mean by “digital” and how is it transforming financial services today?

Since the subject of digital transformation is a broad one that affects financial services from one end of the industry to the other, and can include such diverse topics as greenfield strategies or digital content management, I thought I’d begin this blog series by going “back to the basics” and progressively tap into more specific discussions. I’d love this to be an ongoing conversation, with you, the audience, joining in the comments section below and suggesting ways we can dive deeper as time goes by. Let’s give it a shot and get started!

What is digital?

Digital is no longer about zeros and ones. Now, when we think of digital, we tend to think of it from a behavioral perspective. If I order a cab by waving my hand on the street, I’m traditional—if I use Uber or Lyft, I’m digital. What’s radically different between these two approaches is the way people access and are served by their providers. We can conclude that “digital” provides new tools to solve old problems.

However, as we take advantage of these new tools, also new behaviors emerge. Thinking about social networks, for example: we haven’t suddenly become sociable since Orkut or Facebook appeared. We’ve always been sociable, but as the scale of our societies grew, it became more and more difficult to get to know others and to be known ourselves. Thankfully, technology has brought us back together. But with a difference: now, instead of having to meet face-to-face, we can meet virtually, anywhere, anytime and sometimes anonymously —and this peculiarity is in itself reshaping our behaviors and interactions in a powerful way.

How does digital affect financial services?

With this logic in mind, whenever we discuss technologies, including Fintech, we should begin by asking the questions:

What problems are there to be solved?

What behaviors are associated to these problems?

How might these behaviors change if digital tools are involved?

Financial planning is a good example of a problem. Customers like to think they can gather the resources they need to fulfil a dream, such as buying a house, and live comfortably in later life, throughout their retirement. Traditionally, to make those types of plans they either had to be educated enough to make their own money-related decisions or they had to rely on professionals to do it for them.

But with advances in technology, companies have developed apps to give customers the power to manage their personal finances, make their own decisions, track expenses and save money. Clearly, digital has helped solve a problem. Yet, when we look at people’s behavior as they use these types of apps, we realize that not everyone makes money decisions in the same way. In fact, many of these apps were designed with the same logic and structure that a financial advisor uses when budgeting. However, many consumers do not have such logic, structure or even discipline, to really take advantage of these apps.

On the other end, enter Moven, a system designed to help people “build good financial habits.” Moven provides a digital bank account paired with an app to help customers proactively track their finances and manage their overall wealth. It monitors people’s each and every step—e.g. payments—providing real-time feedback and using the customer’s context to smoothly place relevant financial offers—e.g. saving a cash surplus—, in a similar way to how Fitbit provides fitness and health-related data to users. In this regard, Moven takes advantage of transformed behaviors that emerged after digital tools came to existence, instead of just digitizing a traditional behavior. Or, as Brett King—Moven’s founder—likes to put it: Uber didn’t redesign taxis, they redesigned the journey.

Can you think of other ways digital is transforming the services we provide to our customers? Leave a comment below and let’s have a conversation.

Next week, I’ll look at how liquid services can fit into the daily lives of our customers.

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